12.1 Accounting obligations
All those who are obliged to submit returns according to the VAT Act are also obliged to keep accounts, regardless of whether the business is liable for VAT. This applies whether the business is run as a sole proprietorship, a general partnership or a limited company.
Many persons entrust the keeping of accounts to an accounting firm. The accountant must be an authorised or registered accountant. In addition to the ongoing keeping of the accounts, and the compilation of the annual report and completion of income tax returns, the accounting firm may also be able to assist with the submission of VAT returns, tax withholdings and employer’s national insurance contributions. Information on accounting regulations may also be obtained by contacting the Tax Office.
A new Accounting Act has been in effect since January 1, 1999. As from 1999, annual accounts must be set out according to the new regulations. According to the new Act, it is not necessary for small, sole proprietorships (with assets of NOK 20 million or less and no more than 20 employees) or general partnerships (up to NOK 5 million turnover and no more than 4 employees) to prepare annual accounts. However, businesses in this group must prepare an annual report for income tax purposes in order to determine taxable income and assets for the year.
Until further notice, those obliged to keep accounts may elect to adhere to the regulations relating to the registration and documentation of accounting information (bookkeeping), as set out in the Accounting Act of May 13, 1977 and associated regulations. Such persons must also comply with the bookkeeping regulations issued since December 31,1998 pursuant to the VAT Act. Current practice, for the time being, is that most businesses have elected to follow the old legislation.
A brief description of the old regulations is given below. For the new regulations, please see Chapter 2 of the Accounting Act and the regulations of May 6, 1999 relating to the accounting system, registration, documentation and storage of accounting information. The old regulations relating to bookkeeping may be found in the Act relating to the Obligation to Keep Accounts no. 35 of 1977, and in the VAT Act no. 66 of 1969 and associated regulations.
Accounts must be presented for audit when demanded by the tax authorities.
Which books must be kept?
As a minimum accounting requirement, the following books must be kept:
- cashier’s ledger for cash receipts and payments
- a daily record of all other business contingencies
- goods withdrawal ledger
- account book (subsidiary ledger)
- general ledger
- year-end settlement ledger
If the business has cash supplies, the following must also be kept:
There are regulations relating to the possibility of keeping accounts in computerised form.
12.2 Verification of costs and income
The entry of each item in the accounts must be verified by a voucher. As a rule, the entries in the accounting ledgers shall be numbered consecutively with a reference to corresponding numbering on the vouchers. Costs must be verified by the original vouchers from the suppliers. If not, these cannot be deducted in the VAT account.
It is very important that sales are adequately verified. A sales document must be issued (invoice, note or bill) on the sale of goods or services to other taxable persons or to registered public institutions. The sales document cannot be issued prior to the supply of the goods or services unless the Ministry decides otherwise.
The sales document shall be numbered and dated, and shall contain:
- the name and address of the registered person that delivers the goods or provides the services
- the organisation number issued pursuant to the Act relating to the Central Coordinating Register for Legal Entities, followed by the letters MVA
- the name and address of the taxable person that is in receipt of the goods or services
- a clear description of the goods or services
- the quantity or extent of that which is delivered or provided and
- the place to which the goods are delivered, or at which the service is performed.
|The daily supply of goods and services shall be calculated according to the following layout:|
|Cash reserves at the end of the day
||12 561 |
|+ the day’s outgoings, broken down into, for example, the following main items:
|Payments to suppliers
|Goods purchases in cash
|Salaries/wages, freight and other costs
||2 495 |
|- Cash in hand at the start of the day
||1 000 |
|Total receipts during the day
||14 056 |
|- receipts that are not the result of cash sales, broken down into, for example, the following main items:
|Customer payments regarding credit sales
|Proprietor’s contributions to and outlays for the business
|Payments received for rent or other incidentals that do not relate to the business
|Cash turnover for the day
||NOK 13 849|
If a sales document includes taxable supplies, zero-rated supplies or supplies that fall outside the scope of Chapter IV of the VAT Act, each supply shall be entered and totalled separately. The same applies if VAT is calculated on taxable supplies at different rates.
A taxable person who has supplies at the ordinary rate and supplies at the reduced rates of 14 or 8 per cent has taxable supplies to be assessed for VAT at different rates.
In the case of supplies to municipalities that can claim compensation for VAT on the purchase of certain services, the sales document must, in principle, contain the same information.
In the case of supplies of goods and services between registered persons, or of services to municipalities that can claim compensation for VAT, the sales document shall state the invoice amount exclusive of VAT (or, in certain cases, inclusive of VAT) and state the amount of VAT separately.
Cash turnover may be verified by dated and pre-numbered copies of sales slips, or dated cash roll receipts from cash tills.
The amounts displayed on this sales verification shall be reconciled with the actual sum of cash in the till, cheques, bank and credit card slips etc. The result of this reconciliation shall be entered in the cash report ledger. The statements must be dated and signed by the person who counted the cash etc.
Registered persons who have supplies on which VAT is calculated at different rates shall verify their cash turnover using a cash till, terminal or other equivalent system, or by means of copies of dated and pre-numbered sales vouchers. Sales must be recorded in such a way that it is clear which amounts are to be calculated at the various rates.
The table above shows how taxable persons who do not verify their daily cash turnover using dated and pre-numbered copies of sales slips, or dated receipts from cash tills, shall keep a book for the calculation of each day’s turnover.
All withdrawals of cash or goods for personal or internal use, or for gifts, shall be entered. Withdrawals of goods shall be entered in a separate ledger or on a separate voucher. The goods withdrawal ledger shall also include the date of withdrawal and a description of the goods.
The withdrawal of goods or services for use in own business activities, and for which VAT shall be paid, shall either be recorded in the accounts or entered in a separate book.
12.3 Organisation number
Sales documents shall state the organisation number of the business followed by the letters MVA. Businesses that are in doubt as to which number shall be entered on the sales document because the registration number in the VAT register is not the same as the organisation number of the business should contact the Tax Office for clarification.
12.4 Closing of the accounts
The accounting year shall follow the calendar year. In connection with the annual closing of the accounts, an accurate stocktaking must be carried out and documented in stocktaking inventories. Detailed regulations for procedures relating to stocktaking and valuation of stock can be obtained from the tax office on request.
12.5 Storage of the accounts
Accounts books, vouchers, stocktaking inventories, correspondence and other documents that can validate the bookkeeping, must be kept in Norway for at least 10 years after the end of the accounting year in question.
12.6 Duty of disclosure
Taxable persons are obliged to provide information about their business in order that the tax authorities can carry out their control procedures. Taxable persons are obliged to provide on request information relating to any financial transactions which they have had with other named taxable persons.
Taxable persons who award on-site building or assembly assignments to foreign businesses must, at their own initiative, submit information relating to the assignments and to persons who perform assignments relating to the main assignment (e.g. subcontractors). The information must be submitted to the Tax Office in the county where the work is performed as soon as possible after the contract has been signed, and no later than 14 days after the work has begun. The tax authorities are authorised to impose an ongoing daily penalty on anyone who does not comply with the obligation to provide information.